ARM Wrestles Street and Wins With Q3 Numbers (ARMH)

While Apple (NASDAQ: AAPL) failed to impress investors today with a smaller version of its iPad and experienced a 3% slump, ARM Holdings (NASDAQ: ARMH), makers of microchips for tablets and smartphones, watched its stock soar on its better-than-anticipated third-quarter results.

ARM announced Q3 revenue of $227.9 million, up over 18% from a year ago, which beat the Street’s consensus estimates of $222.2 million. This represents a 22% gain in profits. On the day, ARM rose $3.07 to $31.19, a gain of nearly 11%.

Having closed Monday’s trading at $28.12, ARM opened today’s session at $29.94 and enjoyed steady gains until 1:30 PM when it saw its high mark of $31.75 before beginning its retreat to its closing price. Trading was heavy with 9.25 million shares changing hands, a number that is four times that of a normal trading day for the British chip manufacturer.

Though today’s numbers surpassed Street expectations for Q3, ARM announced that it expects its numbers to fall in line with analysts’ predictions for Q4 with revenue expected to be in the neighborhood of $237 million.

While the last weeks of trading have highlighted the struggles of the PC market, smartphone and tablet sales remain strong, a boom for ARM Holdings.

“ARM has delivered another quarter of strong revenue and earnings growth,” CEO Warren East said in a statement. “As we move into an ever more connected world of mobile computing, cloud-based networks and the Internet-of-Things, ARM is seeing increased demand for its high performance and low power technology. This demand is helping to drive ARM’s licensing revenues and this quarter we saw market leaders license ARM’s advanced processor technology for next generation super smartphones, tablets, and mobile and embedded computing applications.”

Included in today’s statement was the announcement that it had signed 29 new processor licenses during the third quarter, taking the group’s growing total to 920.

East also commented, “ARM’s royalty revenues outpaced the industry with continued market share gains in key end markets including digital TVs and microcontrollers. The increasing penetration of Cortex-A class technology and adoption of Mali graphics in consumer electronics also helped increase ARM’s overall royalty revenue per chip. This strong growth in licensing and royalty revenue allows ARM to keep investing for the future and deliver increased profits and cash generation.”

Broker Investec described ARM as “the stand-out tech play” and maintained its “buy” recommendation on the company. As ARM was one of two risers in the pool that make up the FTSE 100, Investec’s advice and tomorrow’s trading could very well see additional gains for ARM Holdings.

To conclude the day and look to the future, CEO Warren East further reassured investors with the fact that ARM enters Q4 “with record order backlog and a robust opportunity pipeline.”

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Published by Brendan Byrne

While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. You may contact Brendan via his email (brendanbyrne@wallstreetpr.com) or his Google+ page (https://plus.google.com/u/0/116608759701551457422).

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